The rate of tax deducted at source (TDS) on life insurance policies where maturity proceeds are taxable has been halved from 2% to 1%. Under section 194DA, TDS is applicable on all taxable payments made to them if the total amount exceeds Rs 1 lakh.
Under section 10 (10D), maturity proceeds received under a life insurance policy are exempt from tax. However, the benefit is not extended to policies where the annual premium exceeds 10% (20% in case of policies sold prior to April 2012) of the sum assured.